A score of 99 percent is about as close to perfection as you can get. It’s a solid A in school, a nearly unblemished fielding percentage in baseball and a terrific response rate for a survey.
But the way Steve O’Hara looks at it, you’re either perfect or you’re not. Thus, it’s not a near miss when a customer of Angelica Corp., a provider of textile rental and linen management services to the U.S. health care market, asks for 1,000 pieces of linen and receives 990 of them.
It’s incomplete.
“We didn’t ship the last 10 pieces,” says O’Hara, the company’s president and CEO. “That counts as a zero in terms of an order fill rate. If we ship an entire order, but we don’t ship the doctor’s 10 lab coats, that customer is very upset, even though we shipped the other 990 pieces.”
O’Hara felt this acceptance of small mistakes or material imperfections was threatening the trust between the 6,000-employee company and its clients. Providing top-quality service was becoming secondary so long as financial goals were being met.
“Ultimately, the quality hospitals would have gotten fed up with that and brought laundry back in house to do it themselves,” O’Hara says. “It would have been a waste of their talents and energies because it’s not a core competency for them. It would have been a low, value-added industry with cost being the dominant criteria.”
Angelica needed to change the way it did business if it was to maintain relationships with its customers and continue growing.
“The fact of the matter is, our customers are experiencing reduced patient counts, greater bad debts in their endowments and their charitable giving is down,” O’Hara says. “From that aspect, we’d be naive to think now is the time to go out and seek dramatically higher pricing. We have to focus on items that provide value to our customers.”
When you fail to think of your customers, you are asking for trouble.
“If you do not satisfy the customer long-term against their wants and needs, you’ll see, over time, erosion of customer retention rates, lower pricing increases and less acceptance of new products. If you have a delighted customer, then they are much more receptive to renewing to you at fair pricing and buying more products from you.”
O’Hara sought to turn things around by implementing a policy in which the goal would be to fill orders 100 percent complete every time. Each order would need to include everything the customer ordered and each item would be shipped in pristine condition.
“You have to ask yourself, ‘How much of a shock do you want it to be to the system?’” O’Hara says. “In the case of our 2005 change, we did want it to be a reasonable, measurable and meaningful shock to the system because we thought the system had to change.”
O’Hara needed to develop a vision that would better serve his customers, sell that plan to both the company and the customers, and then track his success at implementing the plan.
